Australia is a country with a sound taxing system. The taxation system prevailing in the country is not unlike most countries where the greater denomination of tax revenue arises from income tax. Here is a brief description about its major tax systems and superannuation schemes.
Income tax in Australia is calculated applying a progressive tax rate slab where higher rate of tax is imposed on higher income.
The income tax rate for the year 2009-10 is as under-
For income between 0-$6000, the tax rate is nil. For $6001-$35000, the rate applicable would be 15%. For $35001-$80000, the rate applicable is 30%, for $80001-$180000 the rate is 38% and above $180000, the rate applicable is 45%
Another taxation tool of the Government of Australia is the Capital Gains tax and the corporate tax. The Capital Gains tax is applied on all taxable capital assets as per the provisions of the Australian Taxation Office. 50% of the net gain on any asset is deducted straight away while calculating Capital Gains. For superannuation, the rate is 33.33%. All companies are liable to pay taxes in the form of corporate tax to the Australian Government. The tax rate for corporate tax is a flat 30% on the net earnings distributable to the stake holders or shareholders of the company.
The Australian Taxation System also imposes tax on Superannuation. Tax is imposed on superannuation on basically three stages namely on contribution made, investment income and benefits paid. The employer’s contribution, which currently is 9% of the income of the employee, to the superannuation fund is susceptible to taxation. However a maximum deduction of $5000 plus up to 75% over $5000 can be made.
Self managed Super Fund is a type of superannuation fund which provides pension schemes to individuals usually run by a small group of not more than five people. A Self managed Super Fund is usually regulated by the Australian Taxation Office. The Self managed Super Fund needs to have all the members as trustees of the fund. Also no member of the fund can be the employee of another person involved in the fund. If any corporate trustee forms part of the fund then it is required for each of the other members of the fund to be a director in the corporate trustee. This type of fund is widely getting popular amongst tax payers in Australia as this super fund provides a tax shield to some extent.
Self managed Super Funds provide the people with great control and freedom to choose the assets and investments they want to invest in which other super funds fail to provide. This type of funds is the fastest growing segment of the Australian superannuation category.